Quiz: Homebuyers lack mortgage know-how

Test your knowledge

Pop quiz. True or false, the rates of 5/1 adjustable-rate mortgages always increase after five years.

If you answered true, then you've joined 57 percent of people who also gave the wrong answer in a recent survey from real estate site Zillow on mortgage basics. (The right answer is false because while such loans do adjust after five years, the rates could go either up or down.)

This wasn't the only trouble area. The 1,000-plus poll-takers also had trouble with interest rates, FHA loans and lender fees. Overall, 44 percent said themselves that they were lacking in knowledge of the basics.

The consequence of misinformation could mean lost dollars for potential homebuyers, said Erin Lantz, director of Zillow's Mortgage Marketplace.

What she said:

By simply spending a few hours researching how a mortgage works, and by shopping around for the most competitive rates and fees, buyers can save a lot of money.

Other findings from the online survey, taken April 13-15:

--Forty-five percent of those surveyed think they should always buy mortgage discount points, which are prepaid interest. The fact is, the decision hinges on how long you plan to own the property. It would not be worthwhile to buy them in certain cases.

--Fifty-five percent of those polled don't grasp the concept that rates of home loans can change drastically throughout the day.

Think you know more than those who took the survey? Go to the interactive on the right and see how you do.